Do cash flows reported by firms articulate with their income statements and balance sheets?
Author InfoJuha Kinnunen, Markku Koskela Abstract Using data for a sample of listed Finnish firms for 1995-97 this paper examines the coincidence of reported cash flows with corresponding cash flows estimated from income statement and balance sheet data. The issue is important in light of prior empirical studies that have analysed the properties and usefulness of cash flow information derived from income statements and balance sheets. In addition, financial analyses of firms not disclosing cash flow statements are implicitly based on the assumption that income statements and balance sheets are useful in producing unbiased and efficient estimates of cash flows. The overall findings indicate that reported cash flows do not always articulate with income statements and balance sheets and that non-articulation can be observed in cash flows from operating, investing and financing activities. The differences between reported and estimated cash flows prove to be mostly random. The findings on
